Italy PM defies call to go after meeting rival

February 13, 2014 - 8:01:06 am

ROME: Italian Prime Minister Enrico Letta defied pressure to resign yesterday to let centre-left leader Matteo Renzi form a government, saying anyone who wanted him out must say so openly and outline what they would do in his place.

Letta’s comments came at the end of a day of mounting tensions in Rome where the two men met for what the prime minister described as a “frank” encounter in his office.

“Anyone who wants to take my place must spell out their intentions, I’m asking for clarity,” he told a news conference at which he laid out a package of reforms he will propose to a meeting of the centre-left Democratic Party (PD) today.

Days of repeated criticism by the ambitious and fast-talking Renzi of the Letta government’s failure to lift the economy out of its worst slump since World War Two have piled growing pressure on the prime minister to stand aside.

Today’s meeting of the PD’s 140-strong leadership group, called to decide whether the largest party in the coalition will continue to support the prime minister, is now set for an open showdown between Letta and his party leader Renzi.

The victory of the 39-year-old mayor of Florence in a PD leadership primary in December has shaken up politics in Italy and complicated life for his party colleague Letta, who has nothing like his rival’s voter appeal and telegenic presence.

A low-key moderate with roots in the old Christian Democrat party, Letta was appointed in April to lead a cross-party government patched together after last year’s deadlocked election.

Since then, he has kept the unwieldy coalition together and won approval from Italy’s international partners by keeping a lid on public finances but has struggled to pass wider reforms of the economy or the dysfunctional public administration.

The latest ructions in Italy, the euro zone’s third-largest economy, have so far left financial markets unperturbed, with the risk premium on Italian 10-year bonds over German Bunds around 200 basis points, comparable with levels seen before its bonds were sucked into the euro zone debt crisis in 2011.

But continual uncertainty has held back any radical effort to revive an economy that has shrunk by more than nine percent since 2007, sending unemployment to record levels not seen since the 1970s.

Renzi, a centrist who does little to conceal his disdain for his party’s traditional left wing, was described by party sources as furious after Letta’s remarks but more determined than ever to push for a change. He has talked in the past of holding new elections but is well aware that until the electoral law that produced last year’s stalemate is changed, any new vote would almost certainly produce another impasse.

President Giorgio Napolitano, the 88-year-old head of state who would have to call a new election if Letta loses the support of his party and no new government can be formed, brushed off talk of a snap poll.